Explainer: You have a Bahria Town plot, now what?

In the morning, on Friday, news broke that the Supreme Court had issued a verdict against Bahria Town. It found that it bought land from the Malir Development Authority illegally to set up its mega project off the Karachi super highway.

The Supreme Court said: Bahria Town cannot sell or allot any more plots or any kind of real estate units. The court’s order doesn’t say anything about allowing transfers. Every other comment the court has made in this order would make the current allotments unbuyable.

If you invested in Bahria Town Karachi, you are understandably worried. The court appears to understand that many people invested hard-earned money in Bahria Town. This project can be given a chance to salvage itself only because the innocent public could suffer.

The court has given everyone a possible way out. It has said that the land must be bought at its proper rates. This applies only for the land already allotted and constructed upon.

Why does Bahria have to re-buy the land?
The MDA sold the land to Bahria at suspiciously low rates. (The schemes by which the Sindh government appeared to have colluded with a private entity to maximise profits rather than the public good have been deprecated and NAB has been ordered to “pick up where it left off”.)

What next?
A monitoring bench of the SC will determine the formula for the way out. It will decide:

1. How much land can be repurchased by Bahria Town

2. How will the land be purchased

3. How will allottees be protected

4. How will infrastructure investments be evaluated

My installments?

If you were allotted a plot, you might be paying Bahria for it in installments. You will now pay them to the Karachi registry of the Supreme Court. It has been instructed to collect the instalments in pay orders or checks.

Should I sell?

The Supreme Court’s silence on your ability to transfer your plot perhaps allows allottees to sell their plots. But you would have to be an idiot to buy them or to sell it at this moment of panic. It is best to sit tight and deposit your installments in time and ensure you do not default on them.

This will hurt speculators, as it should. This was after all pitched as an “incremental housing scheme” designed to pull people out of poverty and not to have houses more than 120 yards. This aspect is what allowed Bahria to buy government land at a discounted rate in the first place which the court has been very severe with.

Bahria Town’s reaction

While Bahria is trying to spin this as if it were a simple case of it not paying the right rate for land which can be easily fixed, this is not necessarily the case. That is Bahria’s absolute best-case scenario, should a monitoring bench take a radically more lenient view than these judges did.

What is more likely to happen is that Bahria’s plans to develop 11,000 acres will be cut short. It will be forced to pay heavily for the land it bought from the Sindh government at subsidized prices.